Chinese search engine and AI giant Baidu on Tuesday posted a stronger-than-expected 25% jump in first quarter earnings from a year earlier, beating analysts’ estimates.
The Beijing-headquartered company reported 28.13 billion yuan ($4.38 billion) in total revenues for the three months ended March, compared with the average 27.3 billion yuan ($4.2 billion) that was forecast.
The strong performance was driven partly by its non-advertising revenue, which rose 70% year-over-year to 4.2 billion yuan ($646 million) and includes the company’s cloud, AI and smart transportation businesses.
Despite increasing competition from rivals including ByteDance, Alibaba and Tencent, Baidu still managed to bring in 16.3 billion yuan ($2.48 billion) in online marketing revenue, an increase of 27% year-on-year.
Monthly active users on the Baidu App climbed to 558 million, of which the proportion of daily logged in users reached more than 75% in March 2021, the firm said.
During an earnings call, Baidu predicted revenues of 29.7 billion yuan ($4.5 billion) to 32.5 billion yuan ($5 billion) for the second quarter.
“We see a great opportunity to offer non-ad services of our own to meet the needs of our large user base. When you couple this with the robust growth of our AI business, non-advertising revenue could possibly exceed advertising revenue within Baidu Core in the next three years,” Baidu chairman and CEO Robin Li said during the call.
“We will continue to invest heavily in sales, R&D and operations to support the rapid growth of our AI-powered business,” added CFO Herman Yu.
Leveraging its AI capabilities, Baidu started investing in autonomous driving eight years ago. Its autonomous driving system Apollo now supports the company’s various business models including robotaxi services, electric vehicle (EV) manufacturing, as well as software services provider for OEMs (original equipment manufacturers).
During the Shanghai Auto Show last month, Baidu announced plans to have Apollo pre-installed in at least one mass-produced car model each month in the second half of 2021, with a target of at least six car models in total.
Right now, more than 10 domestic and multinational automakers have signed deals with Baidu to have Apollo installed in the new vehicles, Yu added.
The firm has also established Jidu, a EV company established in partnership with Chinese automaker and Volvo-owner Geely. Xia Yiping, the newly appointed chief executive of the venture, told Reuters earlier that it will invest 50 billion yuan ($7.7 billion) in producing smart cars over the next five years.
Baidu’s Nasdaq-listed shares jumped 3.5% in premarket trading before slipping to close 0.17% lower at $188.88 on Tuesday. The company obtained a secondary listing in Hong Kong in March, raising $3.1 billion.